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Fragmentation, Fast Pace of Tech Challenge Smart Lock Market: Parks

After five years of growth, the fragmented smart door lock industry is facing barriers to wider and faster adoption, said Parks Associates analyst Jennifer Kent in a June white paper, co-authored by PassiveBolt smart lock tech company.

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As of Q4, just 11% of U.S. internet households, some 12 million, owned a smart door lock, and 29% said they intended to buy one over the next six months, said a Parks survey. About 15% of multi-dwelling unit (MDU) owners said they had a secure access system for individual units and common areas that included IoT devices they can access and control remotely, it said.

Most residential door locks installed in the U.S. are mechanical, but an increasing number of exterior locks in single-family homes are being replaced with smart door locks, the report said. Multifamily, retail and commercial spaces are also adopting connected entry systems to create more secure and functional spaces.

A major challenge to smart lock ownership is battery power limitations, the report said. Battery power limits the devices’ ability to support more robust networking protocols and advanced features or interfaces. The need for frequent battery replacement causes a poor user experience and requires, in many cases, a traditional physical key option: “Homeowners will not tolerate coming home to a door they cannot unlock because the battery has run down,” Kent said.

But as connectivity becomes a de facto requirement in the home, new features and applications are required to stay competitive. Manufacturers have to continually innovate and develop new strategies to bring products to market quickly as the market becomes saturated with new players, Kent noted. More than 10 new brands have entered the space in the past two years, the report said.

New sensing features help determine the status of a lock and also can trigger lock and unlock commands when an authenticated user is in or out of range, the report said. Sensors can also detect a break-in or alert users to attempted tampering. OEMs are also working on the power issue, with Masonite working on a powered doorframe; Alfred and Yale are developing wireless charging solutions, the report said.

Companies are looking at increasing the use of biometrics to grant access: fingerprint, facial recognition, voice authentication and iris scanning. Kent noted Apple introduced its Home Key feature for iOS 15 that allows users to unlock near-field communication-enabled locks with a secure, encrypted passcode stored in the user’s Apple Wallet.

Premium features help prop up smart door lock prices, which fell from an average selling price $133 in Q4 2019 to $101 two years later, Kent said. Manufacturers are looking for services that can create recurring revenue streams.

Several generations into development, smart locks now have once-premium features built into basic models, the report said. Voice control is a standard feature, included with lights, thermostats, smart TVs and video cameras as devices consumers want to be able to control via digital assistants, the report said. “To remain competitive, device manufacturers need to include voice control,” it said.

Keeping up with smart product innovation is a challenge for traditional manufacturers, Kent said. Product lifecycles for smart products are much shorter than unconnected or locally networked solutions, and they require updates, new connectivity standards, sensor integration and cybersecurity patches. Manufacturers have to be more agile, respond faster to changing market conditions and get new features to consumers “faster than the organization may be able to move,” Kent said, saying traditional approaches to product development could be “holding back the industry’s ability to scale.”

Manufacturers can keep pace either by acquiring innovation or building it in-house, Kent said, noting Assa Abloy’s buy of August Home in December 2017, followed by an agreement to buy Spectrum Brands’ Kwikset, Baldwin and Weiser lock brands, an acquisition that’s pending.

Smart door locks and access control systems also double as points of access for a “future world of services,” the report said, saying companies are vying for control of access points into homes and buildings that enable service opportunities, including in-home and in-garage delivery, health and wellness and pet care.

Alignments and partnerships are helping expand the market beyond safety and security. Door lockmakers have teamed with Airbnb and HomeAway reservation systems to allow home hosts to grant access to guests, and OEMs are working with real estate developers to make smart access standard in smart home packages, the report said. Parcel delivery companies, too, are using smart locks for secure package drop-off service.

Nearly three-fourths of MDU properties with smart door locks use them to grant access to units remotely for unaccompanied viewings, package delivery or third-party services, the report said, and 65% use the locks to track who enters and leaves the property using unique, temporary access codes. A third of MDU property managers said residents are demanding remote access to apartment units, it said.

In addition to granting remote access, typical MDU use cases for smart door lock and access control systems are to receive electronic notifications of who is entering and leaving a space in real time, to assign permanent and temporary virtual keys with access schedules for specific times, to change or revoke access, and to trigger alarms warning of break-ins.

Smart locks also reduce key replacement costs, allow managers to monitor contractors’ labor time by unit and eliminate the need for staff to accompany contractors on a property, the report said.